Sarkozy and Merkel to Tackle Kosovo, Market Crisis

BERLIN - French President Nicolas Sarkozy travels to Germany on Monday for informal talks with Chancellor Angela Merkel that will touch on Kosovo's push for independence and turmoil in the financial markets.

Since taking office in May, Sarkozy has injected new dynamism into the Franco-German alliance, teaming up with Merkel to secure agreement on a treaty for the European Union and helping her persuade the United States to support international efforts on climate change at a Group of Eight summit in June.

However, the restless French leader has also rubbed Berlin the wrong way with his hands-on industrial policy, clashes with the European Central Bank and an out-of-the-blue offer of nuclear cooperation with Libya in late July.

Josef Joffe, editor of German weekly Die Zeit, went so far as to warn this week of a "creeping collision" between the two conservatives, whose leadership styles could not be more different.

"He struts, she plods. He plays rock, she plays chess," Joffe wrote in a contribution for Time magazine.

Merkel and Sarkozy, who have both moved their countries closer to the United States, will try to paper over their differences when they meet at a government-owned estate north of Berlin with their foreign ministers.

Maintaining a common European front on Kosovo is a priority for both leaders amid divisions in the 27-nation bloc on whether to recognise a possible declaration of independence by the breakaway Serbian province.

While France is ready to join Britain and the United States in recognising Kosovo's sovereignty, Germany has carefully avoided spelling out its position in the hope of brokering a compromise.

"They will talk about how to get results from the talks on Kosovo's status and how to keep the EU united in spite of the different views within the bloc," Ruprecht Polenz, head of the foreign policy committee in the German parliament, told Reuters.

A split over Kosovo would deal a severe blow to the bloc's efforts to become a credible force in foreign policy.

Merkel and Sarkozy are expected to stress their support for new measures to boost transparency in financial markets amid fears that the U.S. subprime lending crisis might have a ripple effect on the European economy.

Both leaders have stepped up calls for closer supervision of hedge funds and ratings agencies and are expected to refer to the issue at a joint news conference scheduled for 12:15 p.m. (1015 GMT).

Other issues likely to be on their agenda include Iran's nuclear programme, Afghanistan and conflicts in the Middle East.